In theory, this should have been the end of Papa John's issues. In February, the chain announced it was ending its NFL sponsorship deal, with Pizza Hut becoming the league's official sponsor. Schnatter was meeting with outside marketing firms in an effort to figure out how someone who was the founder and face of the company could play a role going forward, without offending customers.

Instead of a solution, the meetings led to an incident that tore Papa John's apart.

In July, Forbes reported that Schnatter used the N-word in a conference call with marketing agency Laundry Service.

"On the May call, Schnatter was asked how he would distance himself from racist groups online," a source told Forbes. "He responded by downplaying the significance of his NFL statement. 'Colonel Sanders called blacks n-----s,' Schnatter allegedly said, before complaining that Sanders never faced public backlash."

Papa John's and Schnatter, who owns roughly 29% of the company, have paid for the drama. System-wide US comparable sales fell 6.1% in the second quarter, dragged down by a decline of 10.5% in July. In the third quarter, they fell 9.8%. The company anticipates that comparable sales in North America will fall by 7% to 10% for the full year.

Now, the company is reportedly scrambling to sell itself. In late November, The Wall Street Journal reported that private-equity firm Trian Fund Management had pulled out of the bidding for the pizza chain and that no bidders were interested in buying the entire company.